Exhibit 99.1
Two Great Companies,
One Exciting Future
Presentation to Investors
July 24, 2006
Safe Harbor Statement
This document contains forward-looking statements, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “will,” “expects,” and other terms with similar meaning. Forward-looking statements are based on current beliefs, assumptions and expectations and speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. The material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: (1) the possibility that there are unexpected delays in obtaining regulatory approvals, (2) failure to obtain approval of ATI shareholders or the court of the Plan of Arrangement, (3) actions that may be taken by the competitors, customers and suppliers of AMD or ATI that may cause the transaction to be delayed or not completed, (4) the possibility that the revenues, cost savings, growth prospects and any or other synergies expected from the proposed transaction may not be fully realized or may take longer to realize than expected, (5) the possibility that the transaction may not be accretive as expected, (6) that the company may not achieve year-end or longer-term targeted gross margins, research and development expenses, selling, general or administrative expenses, operating margins, capital structure or debt-to-capitalization, (7) that Intel Corporation’s pricing, marketing programs, product bundling, new product introductions or other activities will negatively impact sales, (8) that the company may require additional capital and may not be able to raise sufficient capital, on favorable terms or at all, (9) delays associated with integrating the companies, including employees and operations, after the transaction is completed, (10) the possible impairment of goodwill and other long-lived assets resulting from the transaction and the resulting impact on the combined company’s assets and earnings, (11) unexpected variations in market growth and demand for the combined company’s products (in the mixes available) and technologies, (12) rapid and frequent technology changes in the computing and consumer electronics segments, (13) potential constraints on the ability to develop, launch and ramp new products on a timely basis, (14) R&D costs associated with the development of new products, and (15) other factors that may affect future results of the combined company described in the section entitled “Risk Factors” in the management information circular to be mailed to ATI’s shareholders and in AMD and ATI’s filings with the U.S. Securities and Exchange Commission (“SEC”) that are available on the SEC’s web site located at http://www.sec.gov, including the section entitled “Risk Factors” in AMD’ s Form 10-Q for the fiscal quarter ended March 26, 2006 and the section entitled “Risks and Uncertainties” in Exhibit 1 to ATI’s Form 40-F for the fiscal year ended August 31, 2005. Please see Item 3.12 “Narrative Description of the Business – Risks and Uncertainties” in ATI’s 2005 Annual Information Form and the Risks and Uncertainties section of ATI’s annual MD&A on page 30 of ATI’s 2005 Annual report filed on the SEDAR website maintained by the Canadian Securities Administrators at http://www.sedar.com. Readers are strongly urged to read the full cautionary statements contained in those materials. We assume no obligation to update or revise any forward-looking statement, including any financial targets or projections, whether as a result of new information, future events or any other reason. Additional Information In connection with the proposed transaction, ATI intends to file a management proxy circular with the Canadian securities regulatory authorities. Investors and security holders are urged to read the management proxy circular when it becomes available because it will contain important information about AMD, ATI and the transaction. Investors and security holders may obtain the management proxy circular free of charge at the website of the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) maintained by the Canadian Securities Administrators at http://www.sedar.com. Investors and security holders may obtain any documents relating to the transaction filed by AMD with the SEC free of charge at the SEC’s website located at http://www.sec.gov.
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Creating Shareholder Value: Strategic Opportunities
Creating
Shareholder
Value
Strategic
Opportunities
Stronger
Company
Strong
Execution
Compelling
Economics
Transaction
Summary
A Processing Powerhouse
Growth
Aim to reinvent our industry as the customer-centric technology leader and partner of choice
Ready to win business in commercial and mobile computing and rapidly-growing consumer electronics segments
Innovation
Deliver new customer-centric platforms within an open innovation ecosystem in 2007
Aim to transform processing technology in 2008 and beyond
Choice
Empower our customers to create their own differentiated value propositions in an increasingly commoditized world
Advance an open-innovation ecosystem in competitive markets
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Computing Platform Capability Accelerates Delivery to Market Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Computing platforms accelerate and expand our MPU growth strategy
Particularly in the $17 billion notebook and commercial client segments
Building on AMD processor-based server gains and ATI mobile chipset and graphics leadership
Consumer/ SOHO
Commercial/ Gov, Edu.
Total Desktop
$17.7B $7.3B $10.4B
Mobile
$4.0B $5.4B $9.4B
Server
$4.5B $4.5B
GPU/
Chipsets
$4.3B $4.5B $8.8B
Total
$40.4B $20.1B $20.3B
AMD Comparative Strengths $14.9B TAM*<25% Share
AMD Growth Opportunities $16.7B TAM*<15% share
* Source: AMD, ATI
2005 full year TAM
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High-Growth Digital Consumer Opportunity
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Segment
Digital TV
Multimedia Handsets
Game Consoles
Position
#1 front-end Hi-def DTV ICs
Potential Market Unit Growth Rate*
59%
26%
15%
Historical Gross Margin
~50%
~40%
Royalty
Create and deliver content on any device, anywhere, anytime
* Sources: Handheld: In-Stat: The Big Trends For Cell Phones, 2006-2011; Game Console: In-Stat: Video Game Consoles 2006; LCD TV: DisplaySearch Q2’06
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Common and Complementary Strengths
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Segments
Server
Workstation
Desktop
Game Consoles Notebook
DTV Handheld
Geographies
Greater China
Latin America
Europe North America
Japan
Customers/Partners
Distribution
PC OEM
Retail
Digital Media
ODM
Consumer
Products
Microprocessors
Customer focus
Best-in-class products
Chipset
Graphics Processors
Media Processors
Technologies
64-Bit
Multi-core
HyperTransport
Tech-centric culture
CrossFire
Low-Power
Avivo
H.264
Manufacturing
Fabs and Process Technology
Foundry Partnerships
Blending world-class knowledge, cultures and people
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Partner of Choice
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Computing
Digital TVs
Handhelds
Game Consoles
Strongly positioned as strategic supplier in computing and consumer electronics
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Focused on Strong Execution
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Track record of hitting key AMD milestones ahead of schedule
Combined management team focused on execution, with deep experience in organizational transformations
Integration efforts in place with detailed planning ongoing
Precise market execution strategy in computing and consumer electronics
Hector Ruiz
Dirk Meyer
Dave Orton
Bob Rivet
Henri Richard
Tom McCoy
Rick Hegberg
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Delivering Customer-Centric, Open PC Platform Strategy in 2007
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Commercial Client
Stable image for the enterprise
Best platform support for Windows Vista™
Gaming & Media Computing
Best-in-class Windows® Media Center Edition platform experience
Mobile Computing
Longer battery life for AMD Turion 64 platform
Optimized graphics and media processing solutions for better time-to-market for OEMs
Emerging Markets
Development of integrated CPU-GPU
Accelerated new business and deployment models
…along with best-of-breed discrete CPUs, GPUs and chipsets
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Aim to Transform Processing Technology in 2008 and Beyond
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Combine our key building blocks with a unified development effort to create specialized solutions that our customers seek
CPU
Drivers BIOS
Chipset
Drivers BIOS
GPU
Drivers BIOS
Platforms
General Purpose
BIOS, Driver, Software
CPU GPU Chipset
Data Centric
BIOS, Driver, Software
CPU GPU Chipset
Graphics Centric
BIOS, Driver, Software
CPU GPU Video
Chipset
Media Centric
BIOS, Driver, Software
CPU
GPU
Video
Chipset
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Optimizing Consumer Electronics Opportunities
Creating
Shareholder
Value
Strategic
Opportunities
Stronger
Company
Strong
Execution
Compelling
Economics
Transaction
Summary
Accelerate multimedia adoption on handhelds
Support TV, video, photography, music, 3D graphics and more
Drive features and image quality for LCD and plasma TVs
Enhance digital TV at affordable price points for the best home theatre experience
DIGITAL TV PRODUCTS
MULTIMEDIA AND HANDHELD PRODUCTS
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Shareholder-Centric Financial Strategy
Creating
Shareholder
Value
Strategic
Opportunities
Stronger
Company
Strong
Execution
Compelling
Economics
Transaction
Summary
Optimize transaction structure for shareholder value
Approx. 80% cash consideration to reduce equity dilution
$2.5Bn flexible, fully-committed Term Loan B
De-leverage balance sheet
20-25% debt/capitalization target
Term Loan B pre-payable at par
Use free cash flow and asset monetization
Maintain strong liquidity
Access to $850MM Fab 36 capex facility
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Capital Structure
Creating
Shareholder
Value
Strategic
Opportunities
Stronger
Company
Strong
Execution
Compelling
Economics
Transaction
Summary
$Bn Combined* Transaction Adjustments 2H06 Adjustments Projected Year-End
Cash $3.0 ($1.7) $0.8 $2.1
Spansion Investment $0.7 $0.7
(as of 7/21/06)
Debt $0.7 $2.5 $0.8 $4.0
Debt/Capitalization 11% 36%
Strong balance sheet with strong liquidity
* Represents the combined balance sheets as reported for the quarter ending May 31, 2006 for ATI (Canadian GAAP) and for the quarter ending July 2, 2006 for AMD (U.S. GAAP).
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1H06 Financial Summary Comparison
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Financials
1st Half 2006*
$MM
AMD
ATI
Combined
$1,325
$2,549
Revenue
$3,873
29.1%
57.6%
Gross Margin
47.9%
4.8%
14.2%
Operating Margin
10.9%
$66
$273
Net Income
$339
$24
$33
Stock Based Comp.
$57
$173
$543
R&D
$716
14,967
4,000
10,967
Employees
*1H 2006 represents financials as reported for the two quarters ending May 31, 2006 for ATI (Canadian GAAP) and two quarters ending July 2, 2006 for AMD (US GAAP).
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Revenue and Cost Synergy Objectives
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
2008
2007
Longer-Term
New Platforms More Value-Add Time to Market Silicon Integration
Solutions Drive Revenue
~$40Bn Opportunity
Silicon Integration
Full Service Strategic Supplier More Platforms Intel Chipset Loss MPU Share Gain
0.2-0.4% is $80-160MM
0.5-1.0% is $200-400MM
1.5-3% is $600-1,200MM
Reduce Royalties Logistics & Inventory Public Co. Costs Redundant Efforts
$50-100MM
Manufacturing Efficiencies Libraries/Codecs/Design Tools Other Common IP
Efficiencies Improve Margins
$4Bn COGS
$3Bn Op Ex
$125MM+
$100-150MM
Pre-Tax Synergy Objectives*:
$125MM+ $350MM+ $600MM+
We expect the combination of AMD and ATI
to be slightly accretive in 2007 and meaningfully accretive in 2008*
* Excluding ATI acquisition-related charges for all periods.
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Compelling Revenue Synergy Potential
Creating
Shareholder
Value
Strategic
Opportunities
Stronger
Company
Strong
Execution
Compelling
Economics
Transaction
Financials
Revenue Synergy Drivers
| | | | | | |
Products | | | | | | |
(Gross Margins) | | 2007 | | 2008 | | 2009 & Beyond |
| | | More Client Platforms | | New Platforms | | New Platforms |
| | | Full Service | | More Value-Add | | More Value-Add |
Client MPUs | | Strategic Supplier | | Performance/Power | | Performance/Power |
(55-60% Target) | | | | | | Silicon Integration |
| | | | | | | |
| | | Improve Compatibility | | Coordinated Dev’t | | Silicon Integration |
Chipsets & Graphics | | | | | | |
| | | Longer Battery Life | | Time to Market | | New Products |
(25-37% Target) | | | | | | |
| | | | | New Products | | |
| | | | | | | |
| | | | | | | |
Loss on Intel Chipsets | | | | | | |
| | | Assume | | Assume | | Assume |
(<25% Historical) | | 50% Revenue Loss | | 100% Revenue Loss | | 100% Revenue Loss |
Platforms accelerate unit share and enhance value of the total solution
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Cost Synergies Readily Available
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Financials
Summary of Preliminary Cost Savings Goals*
Annualized 2007 2008 Longer-Term
Cost of Goods Sold $4.0B $25M $50M $50M+
R&D $1.4B $15M $25M $25M
SG&A $1.4B $35M $50M $50M
Total $6.8B $75M $125M $125M+
% of Total 1% 2% 2%
Sources of Cost Savings Analyzed
Longer-Term
2008
2007
Procurement, logistics
Procurement, logistics
Royalty reduction & other operational & other operational synergies
synergies Cost of Goods Sold
Potential Manufacturing
Common Libraries
Redundant Efforts
R&D
Common Libraries
Codecs/Design tools
Intel Prototypes
Codecs/Design tools
Operational efficiencies
Operational efficiencies
Operational efficiencies
Corporate Mktg & Sales
Corporate Mktg & Sales
SG&A
Corporate Mktg & Sales
Public Company costs
Public Company costs
Public Company costs
* Cost savings do not reflect any ATI acquisition-related charges for all periods.
**1H 2006 represents financials as reported for the two quarters ending May 31, 2006 for ATI (Canadian GAAP) and two quarters ending July 2, 2006 for AMD (US GAAP).
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Gross Margin Model
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Financials
1st Half 2006*
Synergy Opportunities
Lower total cost of ownership
Operational efficiencies
Eliminate royalty payments
Procurement, logistics and other operational synergies
Increase platform value-add
Focus investment and drive technology
Hybrid manufacturing $MM Gross Margin Revenue Target Model 58% $2,549 AMD (MPU) 55-60% Discrete Graphics
24% $700 32-37% 25-30% 22% $338 Chipsets Consumer (handhelds, HDTV, royalties) 50% $285 50-55% 48% $3,873
Total 51-56%
* 1H 2006 represents financials as reported for the two quarters ending May 31, 2006 for ATI (Canadian GAAP) and two quarters ending July 2, 2006 for AMD (US GAAP).
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New Target Financial Model
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Financials
Old AMD New AMD
Model 1H06* Combined Model
Revenue 100% 100% 100%
Gross Margin 55-60% 48% 51-56%
R&D 18-23% 18% 18-21%
SG&A 12-16% 18% 11-14%
Operating Margin 18-24% 11% 18-24%
* 1H 2006 represents financials as reported for the two quarters ending May 31, 2006 for ATI (Canadian GAAP) and two quarters ending July 2, 2006 for AMD (US GAAP).
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Transaction Summary
Creating Shareholder Value
Strategic Opportunities
Stronger Company
Strong Execution
Compelling Economics
Transaction Summary
Acquisition of ATI for approximately US $5.4Bn
Consideration: $4.2Bn cash, approx. 57MM AMD shares of common stock, and approx. 11MM AMD options and RSUs*
0.2229 fixed exchange ratio on stock portion
ATI shareholders to own approximately 10% of AMD*
Cash portion funded with $1.7Bn from the combined balance sheets and $2.5Bn of fully committed debt financing
Transaction expected to close in Q4 2006
Subject to ATI shareholder vote, court approval and regulatory approvals, including merger review in the U.S. and other jurisdictions, and customary closing conditions
* Based on AMD’s closing stock price and ATI’s outstanding common stock on July 21, 2006.
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